What is the turnover of sales?
Sometimes it is referred to as in stock or inventory turnover, the turnover of the sale by measurement of how often and how many of the finished goods are sold within a specified period of time. Companies can evaluate the turnover of sales for monthly, quarterly or even annually, depending on the nature of the products sold and the operational structure of business. Determination of sales turnover for a period or even sequence of the period can help the company make modifications in production, which help prevent high stocks of finished goods in warehouses or help the company in the modification of production to satisfy enough finished goods in the coming period to suit consumers' demand.
Sales turnover is the ultimate goal of any company to achieve a high turnover. If the turn is high, it means that a significant percentage of finished goods are sold rapidly rather than disappearing into a storage time. The benefits of high sales turnover include less tax liability for stored finished goods andPossible reduction in the amount of warehouse space that must be rented to make these goods between production and sale. At the same time, a high turnover also means that the sources invested in the production of products bring a faster return on the sale of customers, allowing the company to use the desired level of cash flows.
On the other hand, a low sales turnover is often a sign that the company must make certain changes. Low turns mean that the sale of consumers is not in balance with the degree of production, resulting in a higher supply of finished goods. This is reflected in higher taxes from the volume of finished goods, more expenditure on the placement of products until they are finally sold, and for a longer period of time to create revenue from the resort used to create finished goods. If a low sales turnover is present, the company will look for ways to support additional sales while taking steps to limit production to yourmeasures, at least until the excessive value of the finished goods is reduced to a reasonable level.
Since sales can undergo volume changes from one period to another, companies can monitor historical turnover as a means of screening what will happen in future periods and adequately modify production. For example, if the company usually experiences a fall in sale during the third quarter, recovery will start during the fourth quarter and then record a dramatic increase in demand in the first quarter of the following year, the production plans can be adapted to suit the trend and help maintain sales a little more balanced by one quarter to the next.